10-Q/A: First America Resources Corrects Shell Company Status in Amended Quarterly Report

First America Resources Corporation files an amended quarterly report to correct an error regarding its shell company status and small reporting company status.

Summary

• First America Resources Corporation is filing an amended quarterly report on Form 10-Q/A to correct its disclosure on the cover page.
• The company had erroneously indicated it was not a shell company when it continues to be one.
• The company also corrected its status as a small reporting company.
• No other modifications or updates were made to the original report for the second quarter ended December 31, 2023.
• The original report was filed on February 14, 2024.
• As of December 31, 2023, there were 7,964,090 shares issued and outstanding.
• The company had sales revenue of $3,920 for the fiscal quarter ended December 31, 2023, and $0 for the same period in 2022.
• The cost of goods sold for the fiscal quarter ended December 31, 2023, was $13,369, and $0 for the same period in 2022.
• The company incurred net losses of $11,466 and $3,373 for the quarters ended December 31, 2023 and 2022, respectively.
• The company had cash and cash equivalents of $75,406 at December 31, 2023, and negative working capital of $156,939.
• The company had total liabilities of $232,345 at December 31, 2023.
• The company is supported by the employees of FAMCe (formerly known as First America Metal Corporation), a business owned primarily by Mr. Jian Li.
• The company received $160,992 of battery inventory from Vestwoods Technology Limited on consignment in August/September 2023, selling only 2 inverters for $3,920 before returning the remaining inventory.
• The company owes Mr. Li an aggregate of $228,933 on loans, which are oral and bear no interest, due upon demand.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's ongoing losses, working capital deficiency, going concern uncertainty, and ineffective disclosure controls. The correction of the shell company status is a minor positive, but the overall financial situation is concerning.

Positives

• The company corrected an error in its previous filing, demonstrating attention to regulatory compliance.
• The company received a cash infusion of $100,500 from its President, Mr. Jian Li, to develop its business model.
• The company is negotiating with a battery supplier for sales and distribution in the US markets.
• The company is refocusing its intention initially on acquiring similar properties.

Negatives

• The company had a net loss of $11,466 for the quarter ended December 31, 2023.
• The company has a working capital deficiency of $156,939 as of December 31, 2023.
• The company's auditor concluded that the company's disclosure controls and procedures are not effective.
• The company is really an extension of the many years of operational history of management, as disclosed in the registration statement.

Risks

• The company's lack of operating history and financial resources raise substantial doubt about its ability to continue as a going concern.
• The company may be required to cease or curtail its operations if it is unable to generate significant revenue or secure financing.
• The company's disclosure controls and procedures are not effective.
• The company's ability to acquire properties depends on securing additional equity financing and mortgage financing.
• The company's future success depends on its ability to successfully make and integrate acquisitions.

Future Outlook

The company anticipates acquiring FAMCe (formerly known as First America Metal Corporation) or another operating company within the next 12 months, but this may take longer.

Management Comments

• Management anticipates that after acquisition we will be competitive in pricing of some or all of the following, depending upon market conditions which can change, even rapidly, from time-to-time: Copper, Brass, Stainless, Aluminum, High Temp Alloys, Zinc, Tin, Cobalt, Tungsten Alloys, and electronic material.
• Our president, Jian Li, has significant real estate experience, primarily involving construction and management of various kinds of properties, specifically industrial properties of various type in multiple states.

Industry Context

The company is attempting to transition from its previous business of selling lithium-ion batteries to real estate and battery technology investments, reflecting a shift in strategy to capitalize on emerging opportunities.

Comparison to Industry Standards

• It is difficult to compare First America Resources to industry standards due to its status as a shell company and its transition between business models.
• The company's financial performance is significantly below industry averages for both battery sales and real estate investment companies.
• Comparable companies would typically have established revenue streams and positive working capital, unlike First America Resources.

Related Party Transactions

• Loans from officer/shareholder Jian Li totaled $228,933 as of December 31, 2023.
• A total of 6,388,010 shares were issued to Jian Li, CEO & President, representing 80.21% of the common shares outstanding.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern uncertainty.
• The company's ability to execute its business plan and generate returns for investors is highly uncertain.
• The company's reliance on related party loans raises concerns about potential conflicts of interest.

Next Steps

• The company intends to acquire FAMCe (formerly known as First America Metal Corporation) or another operating company.
• The company plans to pursue additional equity financing for real estate investments.
• The company will continue negotiations with a battery supplier for sales and distribution in the US markets.

Key Dates

Keywords

shell company, amended report, financial statements, real estate, battery technology, going concern, liquidity, capital resources, First America Resources